Economy

US: Weekly jobless claims decline further as Omicron wave subsides. The number of Americans filing new claims for unemployment benefits fell more than expected last week as COVID-19 infections subsided, suggesting that an anticipated slowdown in job growth in Jan was likely temporary. The second straight weekly decline reported by the Labor Department partially unwound the recent surge, which had boosted initial claims to a three-month high in mid-Jan. Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 238,000 for the week ended 29 Jan. (Reuters)

US: Factory orders fall in Dec; shipments rise further. New orders for US-made goods fell slightly more than expected in Dec, but manufacturing remains supported by businesses replenishing inventories. The factory orders decreased 0.4% in Dec. Data for Nov was revised higher to show orders increasing 1.8% instead of 1.6% as previously reported. Economists polled by Reuters had forecast factory orders slipping 0.2%. Orders increased 16.9% in 2021. Manufacturing, which accounts for 11.9% of the economy, is being underpinned by businesses rebuilding inventories. (Reuters)

US: Services index indicates slower growth in Jan. A report released by the Institute for Supply Management showed a continued slowdown in the pace of growth in US service sector activity in the month of Jan. Its services PMI dipped to 59.9 in Jan after slumping to 62.3 in Dec, although a reading above 50 still indicates growth. Economists had expected the index to drop to 59.5. With the relatively modest decrease, the services PMI continued to give back ground after reaching a record high of 68.4 in Nov. (RTT)

US: Labor productivity spikes in 4Q, labor costs show modest increase. Reflecting a spike in output, the Labor Department released a report showing US labor productivity rebounded by much more than anticipated in 4Q of 2021. The labor productivity soared by 6.6% in 4Q after tumbling by a revised 5.0% in the 3Q. Economists had expected productivity to jump by 3.2% compared to the 5.2% nosedive that had been reported for the previous quarter. The substantial rebound in production, a measure of output per hour, came as output skyrocketed by 9.2% compared to a 2.4% increase in hours worked. Productivity data continue to be heavily influenced by the pandemic and will likely stay volatile in the near term.. (RTT)

EU: Private sector growth weakens in Jan. The euro area private sector eased in Jan as the Omicron variant of COVID-19 constrained activity, most notably across the service sector. The composite output index dropped to 52.3 in Jan from 53.3 in Dec. The flash score was slightly below the flash 52.4. The indicator signaled the weakest increase in business activity since the index moved back into growth territory last March. The services Purchasing Managers' Index came in at 51.1, down from 53.1 in Dec and the flash 51.2. (RTT)

EU: ECB maintains status quo. The ECB left its key interest rate and forward guidance unchanged. The Governing Council left its key interest rates unchanged as expected. The main refinancing rate thus remains at zero, the deposit rate at -0.50% and the marginal lending rate at 0.25%. The bank expects the key ECB interest rates "to remain at their present or lower levels until it sees inflation reaching 2%... that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at 2% over the medium term." As announced in Dec, the bank said it will discontinue purchasing assets under its Covid-19 pandemic stimulus scheme at the end of March. (RTT)

UK: BoE hikes key rate, signals more tightening. The BoE raised its key rate again and signaled 'modest tightening' in the months ahead as it struggles to bring the inflation back to the 2% target. The Monetary Policy Committee of the BoE decided to increase the key interest by 0.25 percentage points to 0.50%. While five members including Governor Andrew Bailey sought 25 basis points hike, other four members of the panel voted for a bigger 50 basis point increase to 0.75%. The bank had raised its rate by 0.15 percentage points from a record low at its Dec meeting, which was the first such move since Aug 2018.. (RTT)

UK: Services sector expands at faster pace. The recovery in UK service sector gained momentum as restrictions related to the pandemic were eased and customer demand rebounded. The Chartered Institute of Procurement & Supply final services Purchasing Managers' Index picked up to 54.1 in Jan from a 10- month low of 53.6 in Dec. The score was also above the flash 53.3. The overall private sector growth accelerated slightly in Jan.. (RTT)

India: Service sector growth weakens sharply in Jan. India's service sector expanded at the slowest pace in the current six month sequence of growth amid the escalation of the pandemic. The services Purchasing Managers' Index fell to 51.5 in Jan from 55.5 in Dec. However, a score above neutral 50.0 indicates expansion. The upturn was reportedly stymied by the intensification of the pandemic, the reintroduction of restrictions and inflationary pressures. (RTT)

Markets

I-Berhad (Neutral, TP: RM0.26): In collaboration with China Mobile for metaverse concept to i-City. I-Berhad is bolstering its digital offerings in i-City with the metaverse concept in collaboration with China's telecommunication giant China Mobile. The term "metaverse" refers to a shared interactive 3D virtual world that has been heralded as the next evolution of the internet. The concept came to the fore during the Covid-19 pandemic as lockdown measures increased demand for online business and entertainment. The metaverse was the new logic for developing the next generation of the internet and the future digital economy. (BTimes)

Straits Energy: Appoints Sunny Ho as CEO of indirect subsidiary Straits CommNet Solutions. Straits Energy Resources has appointed Sunny Ho Khin Choy as the chief executive officer of its indirect subsidiary Straits CommNet Solutions SB effective Feb 3. The appointment follows Straits Energy Resources entering into a memorandum of understanding with Texas-based Baicells Technologies Co Ltd to collaborate on driving the growing wireless network communication business opportunities of the 4G and 5G rollout and the digital transformation of the local and regional O&G industry through IoT. (The Edge)

EG Industries: New issue of securities for fund raising. EG Industries has fixed the issue price of the Placement Shares at RM0.42 each. The aforementioned issue price of RM0.42 per Placement Share represents a discount of approximately RM0.1037 or 19.8% from the five-day weighted average market price of EG from 25 January 2022 to 31 January 2022 of approximately RM0.5237 per Share. (Bursa)

NWP Holdings: Managing Director ups stake. NWP Holdings' managing director (MD) Datuk Seri Kee Soon Ling, who is being sued by the company's new management over alleged fraudulent transactions, has upped his stake in the company to 9.745% after acquiring 2.7m shares on Jan 31. The timber products manufacturer said the shares represent a 0.51% stake in the company and were acquired at 17.5 sen per share. Given this, the estimated cost for the stake purchased is RM472,500. Following the latest acquisition, Kee now has 51.3m shares in NWP. (The Edge)

Green Packet: CFO resigns to pursue own interests. Sereen Teoh Hooi Ling has resigned as Green Packet's chief financial officer (CFO) to pursue her own interests. Green Packet said the resignation was effective on 2 February. It said Teoh was formerly the CFO of BIG Rewards, a subsidiary of AirAsia Group. Prior to AirAsia Digital, she was the head of finance of Malayan Banking. (The Edge)

KPower: Second largest shareholder forced to sell 500,000 shares. KPower's second largest shareholder, Grand Deal Vision SB, has disposed of 500,000 shares or a 0.092% stake in the construction and engineering solutions group via forced selling. The shares were sold for 35 sen apiece on Jan 31, with the transaction also reducing the deemed interest of KPower executive chairman and group managing director Mustakim Mat Nun and non-independent non-executive director Sarah Azreen Abdul Samat. (The Edge)

Market Update

The FBM KLCI might open lower today as stocks on Wall Street slid by the most in almost a year on Thursday after a disappointing earnings report from Facebook parent Meta reverberated through the market. The S&P 500 index fell 2.4%, its biggest drop since February 2021, driven largely by falls in tech stocks that dominate the blue-chip US index. The slide ended a four-day rally and took the S&P’s declines this year to 6.1%. The losses for the tech heavy Nasdaq Composite were more intense, with the index that counts Meta and Amazon as members, declining 3.7%, its worst day since September 2020. Investors were shaken by Wednesday’s results from Meta, sending the company’s shares down 26.4% and wiping more than $230bn off its valuation, an unprecedented single-day loss for a listed company. Meta overnight reported its first decline in daily active users and warned of increased competition from rivals such as ByteDance’s TikTok platform. In Europe, the regional Stoxx 600 share index fell 1.8%, with its tech sub-index dropping 3.5%. European government debt sold off on Thursday as central bank policymakers moved to tackle sustained inflation.

Back home, Bursa Malaysia ended higher with strong buying interest in selected sectors particularly banking, plantation and oil and gas. At 5pm, the benchmark FBM KLCI advanced 0.89%, or 13.46 points, to 1,525.73 from 1,512.27 at Monday's close. The key index, which opened 3.65 points higher at 1,515.92, moved between 1,515.25 and 1,526.62 throughout the session. Regionally, Singapore’s Straits Times Index rose 2.04% to 3,315.99, Japan's Nikkei 225 eased 1.06% to 27.241.31, and Hong Kong's Hang Seng Index increased 1.07% to 23,802.26.

Source: PublicInvest Research - 4 Feb 2022